Members of the Bayonne Local Redevelopment Authority met behind closed doors after the July 16 meeting to discuss the latest chapter in an ongoing financial saga with the U.S. Army.
BLRA Executive Director Chris Patella went to Washington, D.C., last week in an effort to resolve an apparent misunderstanding that could cost the City of Bayonne the $90 million it was paid for the sale of slightly under 150 acres to PortsAmerica earlier this year.
“I don’t see this as a problem,” Patella said.
The Army contends that the city and BLRA were not authorized to use the money gained from the sale except for projects on the 432-acre former military base to prepare the site for development.
The BLRA contends that the sale took place after the Army lifted the restriction last October, which required funds gained as a result of sale or even renting property be used for development. This was one of the conditions the federal government established when it gave the land to the City of Bayonne for free in 2002.
“I don’t see this as a problem.” – Chris Patella
________
In a letter issued to the BLRA on July 2, the Army has asked for a full accounting of the land sale, and is concerned with the transfer of about $40 million from the BLRA into the coffers of the municipal government – which used the funds to fill a 2008 budget deficit.
To get around the restrictions in the past, the BLRA and the city engaged in an exchange of money. The BLRA would transfer funds from the sale of land to the city for use in the budget, then the city would bond (borrow) for the same amount, allowing the BLRA to draw down on the loan for needed improvements on the property.
While the Army had previously questioned this practice prior to lifting the restriction, the city did not borrow for the latest transfer of money because city officials believed the restrictions no longer applied.
In his letter to Patella on July 2, Joseph F. Calcara, deputy assistant secretary of the Army, demanded information on how the money was spent, threatening to begin proceedings to collect the money from the BLRA.
Patella, who served as a city attorney prior to taking up his post at the BLRA, said he feels confident that the city can make its case that it acted properly in transferring the money to the city.
The Army, however, said the restrictions did not end in 2008, but continue until July 2010. This has always been a murky legal area since even local officials said the original seven year restriction period was not fixed in stone. The original agreement said the Army would review the agreement after seven years and would have the option to lift the restrictions if its officials believed enough had been accomplished toward moving the base into redevelopment.
The Army also questions some past practices that seem to indicate that despite the city’s efforts to provide borrowed money to deal with redevelopment issues, apparently not enough of these funds actually went toward the purpose of development.
But BLRA officials said 2008 financial records show the city did invest those funds in infrastructure projects.
BLRA gets more federal money
In another matter related to the MOTBY, Patella said the federal government has made $4.5 million available for bulkhead stabilization due to the efforts of Rep. Albio Sires.
“Mayor [Mark] Smith, Steve Gallo and I went to Washington, D.C. in February to meet with Congressman Sires to ask for a special appropriation,” Patella said. “This week, the congressman called us to tell us that we got it.”
Bayonne Crossing Mall gets a temporary $17 million loan
The BLRA also agreed to authorize a short term $17 million loan that would allow the Bayonne Crossing mall on Route 440 to begin work.
This loan would last from August to April at about a 4 percent interest rate. Although the BLRA would use its resources to allow Cameron, the developer, to get lower financing, the developer would be responsible for repayment.
The loan would allow the company to start work sooner rather than having to wait for potential state environmental loans that would not be available until next February.